20.08.202502:15:06UTC+00South Korean Shares Fall Amid AI Valuation Fears

On Wednesday, the benchmark KOSPI index declined by 1.4%, settling at approximately 3,106—its lowest level in several weeks. This drop was primarily driven by apprehensions surrounding a potential AI bubble and prevailing uncertainties prior to the Federal Reserve’s meeting in Jackson Hole. OpenAI's CEO, Sam Altman, cautioned that AI market valuations might replicate the dot-com bubble's trajectory of the late 1990s, when internet and tech stocks surged before dramatically plummeting in the early 2000s, leading to a massive loss of market value in the trillions. These concerns have unsettled investors, particularly due to South Korea's dependency on the semiconductor and AI industries. This anxiety raises legitimate fears about the potential overvaluation of major firms like Samsung Electronics and SK Hynix. In overnight trading, the Nasdaq dropped by 1.5%, reflecting global traders' cautious approach before Federal Reserve Chair Jerome Powell’s speech. His address is anticipated to clarify the central bank's policy position amidst enduring concerns over inflation and economic growth. On the domestic front, notable declines were observed in SK Hynix (-3%), Doosan Enerbility (-8.4%), Hanwha Ocean (-2.6%), Naver (-2%), and Kakao (-3.4%), highlighting the market's acute sensitivity to changing sentiments in the AI sector.